The following table is domestic supply and demand schedules for a product.Suppose that the world price of the product is $1. Refer to the above data.The total amount of revenue collected from a $1 per unit tariff on this product will be:

Question

The following table is domestic supply and demand schedules for a product.Suppose that the world price of the product is $1.  Refer to the above data.The total amount of revenue collected from a $1 per unit tariff on this product will be:

Quizplus · Accepted Answer

With the world price of $1 and no tariff, the quantity demanded is 12 and the quantity supplied is 4. Thus, the domestic market price is $1.50 ($12 - $4 = $8; $8 divided by 8 units = $1.50).
With a $1 per unit tariff, the price in the domestic market will rise to $2.50 ($1.50 + $1), reducing the quantity demanded to 8 and increasing the quantity supplied to 6. The revenue collected from the tariff will be ($2.50 - $1) x 6 = $9.
However, this revenue is not entirely due to the tariff. $8 of it is due to the higher market price ($2.50 instead of $1.50) resulting from the tariff. The actual revenue collected from the tariff is $1 x 6 = $6. 
Therefore, the total amount of revenue collected from the $1 per unit tariff on this product is $8 (from the higher market price) + $6 (from the tariff itself) = $14.

The Following Table Is Domestic Supply and Demand Schedules for a Product.Suppose